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Mango financial results to 31 Mar 2009

Mango announced a R 10,9 million bottom line profit in its 2nd full financial year. Their highlights were:

- Revenue growth: 31%
- Profit after tax: R10.9m
- Industry-leading average load factor of 86%
- 4% growth in market share


Remarks by CEO Nico Bezuidenhout

Mango’s continued focus on cost control, efficiency and guest service delivery saw the carrier attaining profitability against the background of a global aviation Industry that realised losses in excess of US$5bn during the worst-ever year in aviation history.

Operating from the lowest cost-base in South African aviation, brought about by the Company’s leadership in dimensions such as asset utilization, people productivity and innovation, Mango was well-placed to respond to the unprecedented volatility in terms of fuel-prices. The Company, un-hedged in terms of fuel exposure, benefited from operating a new-generation fuel efficient fleet whilst it further implemented various fuel-savings initiatives. Fuel cost savings, together with growth in ancillary revenue streams (derived from diverse sources ranging from travel insurance sales through to on-board advertising sales via MangoTV), allowed Mango to moderate the impact of escalating fuel cost on core ticket prices. 

Apart from maintaining Mango’s cost-conscious organisational culture during the review period, Mango realised substantial service delivery improvements. In this regard the Company maintained the best on-time performance of any South African carrier, was awarded the Best Low Cost Carrier award in the 2008 ACSA Feather Awards at three of the four airports from which it operates and was voted top Low Cost Carrier in terms of service delivery in South Africa according to the 2008 Orange Service Index. For the second consecutive year, Mango was furthermore awarded the PRISM Public Relations award by the Public Relations Institute of South Africa (2008 PRISMS).

From an innovation standpoint Mango continued to give effect to its mandate of making air travel more accessible and the Company now operates the broadest payment and distribution network in the South African industry, including world-firsts such as ticket payment via retail store accounts (Edgars, Jet, CNA and Boardmans), online debit card payment and distribution via electronic procurement platforms, travel agents and the continent’s largest retailer (Shoprite-Checkers). Mango furthermore implemented both web check-in and automated airport kiosk check-in, positively impacting operating costs and service delivery standards. 

Mango, having carried over 4 million South Africans and having realised market-share gains, is well positioned to deliver a solid performance in the 2010 financial year, despite the global aviation industry again forecasting deep losses. Through efficiency, innovation and global best practice Mango, as a public enterprise, will continue with its mandate to make air travel more affordable and accessible in a sustainably profitable manner, to the benefit of our Guests, our Shareholder and the South African economy at large.

Mango Financial position

- Revenue-per-flight growth of 42% driven by load-factor, average fare and ancillary revenue growth;
- Operating cost increased 15%, driven by fuel cost escalations (30% effective increase) and currency weakness;
- A 5% headcount reduction (through natural attrition) and supplier contract renegotiation aided the Company in maintaining unit-cost leadership; 
- No changes were affected to the Company’s capital structure during the review period;
- Shareholders valuation improved to above R500 million.

Business Conditions

The business environment during Mango’s second full fiscal proved challenging as the cost of fuel reached its highest levels in several decades, compounded further by currency weakness during the latter part of the review period. In mitigation, Mango removed excess weight from its aircraft (ovens and other unnecessary items), rewarded Guests for traveling lighter and implemented further operational fuel-saving measures. 

In addition to cost-pressures the global economic downturn, and consequent reduced propensity to travel, negatively impacted domestic demand to the extent of a 13% year-on-year decline in overall market passenger volumes. Concomitantly a trend for business travelers to switch from full-service airlines to more affordable alternatives also became more prominent during the review period. Mango, by virtue of its everyday price-leadership, and following the introduction of offerings that meet the flexibility requirements of business travelers in the form of MangoPlus and MangoFlex, continued to attract new customers and grow load factors (by 2%) and market share (by 4 basis-points). 

Social and Environmental Responsibility

- Mango recognizes that it has a responsibility to the greater community and continues to act in a socially responsible manner for the benefit of all South Africans; 
- Involvement includes the Dreamfields soccer project as well as HIV prevention and nature conservation initiatives among others; 
- Mango has initiated a fundraising partnership with UNICEF on its website to raise funds for various initiatives by the organization.
- Mango has adopted appropriate BBBEE, employment, training and procurement procedures;
- Mango operates the newest, most fuel-efficient and environmentally friendly jet-fleet in South Africa. 
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Future Plans

- Mango plans to increase its route network in due course;
- Mango will increase its focus on ancillary revenue and leveraging its brand and assets for commercial benefit; 
- Mango remains cautiously bullish given the current economic climate and expects to again be profitable in the coming fiscal;
- The Company remains committed to making air travel more affordable and more accessible to all South Africans.

Results took a long time to come out

The results to 31 March 2009 were reported on the 29th September 2009, some 6 months after year-end. In airline parlance, this is like a delayed flight.

But no financial statements

"I am not releasing our financial statements as that is sensitive information. We've always said we would report on the results and tell the taxpayer how we have performed. We have never promised to publish the audited financial report," Mango chief executive Nico Bezuidenhout told Fin24.com on 30 Sep 2009.

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Category : Mango Airlines



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